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CP Chem Bids to Acquire Nova In Big Petrochemical Merger

Chevron Phillips Chemical’s rumored bid for Nova Chemicals might influence North American polyethylene resin markets.

CP Chem, based within the Woodlands, Texas, was offering over $15 billion for Nova of Calgary, Alberta. Nova officers refused to touch upon the story. Officers with CP Chem couldn’t be reached for comment.

The report quoted unnamed sources who stated that Nova proprietor Mubadala Investment of Abu Dhabi has been searching a sale since early 2019. They added that there is “no certainty” that state-owned Mubadala will agree with the CP Chem bid.

Market analyst Phil Karig mentioned that with all the attention given to new shale gas driven PE capacity growth, it is sometimes easy to neglect that including large quantities of existing capability during acquisitions “can rapidly alter the competitive landscape.”

Ashish Chitalia, a principal analyst at world consulting agency Wood Mackenzie, mentioned CP Chem and Nova have corresponding products, geographic footprints, and expertise.

“The petrochemical market is consolidating, with the leading players – ExxonMobil, Saudi Aramco, LyondellBasell, Dow –  increasing organically or via M&A,” he stated. “Since 2018, many petrochemical corporations are under stress owing to the slow financial progress outlook, the credit crunch in India, China, US-China commerce struggle, and the plastic backlash.

He added that with as much as 1.5 millions of merchant ethylene accessible to CP Chem after a Nova Chemicals purchase, “the corporate would be in a robust position to leverage the second expansion wave on the Gulf coast.”

CP Chem is a 50-50 joint corporate between oil and energy companies Chevron Corp. and Phillips 66. The business was incorporated in 2000 and is a crucial producer of high density, low density, and linear low-density PE, in addition to other petrochemicals.

CP Chem’s Performance Pipe unit is also certainly one of North America’s largest producers of HDPE pipe. CP Chem has annual sales of nearly $12 billion.

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